Experts Express Concerns Over Broadband Plan to Small Business Committee

WASHINGTON, May 4, 2010 - Small businesses must have better access to broadband technology to flourish, propel the nation’s economic growth and to better be able to compete on a global level, said experts at a Senate hearing last week.

Sen. Mary Landrieu, D-La., who chairs the Senate Small Business and Entrepreneurship Committee, held a hearing on federal efforts to expand small business internet access through vehicles such as the Federal Communications Commission’s National Broadband Plan.

“While we must expand access to these services, at the same time, we must ensure broadband is affordable for these entrepreneurs,” Landrieu said. “If our goal is to allow these small firms to grow, we cannot limit their growth by over-charging for services. Business could instead use this capital to hire new workers or upgrade older equipment.”

According to reports from the FCC, businesses with 25 employees or less pay two times more per employee for broadband than those with more than 25 employees.

Jonathan Adelstein, administrator of the Agriculture Department’s Rural Utilities Service, testified before the committee and noted that approximately 181 applications requesting  $2.9 billion from Agriculture’s Broadband Initiatives Program came from small businesses, minority owned firms, Indian tribes and native Alaskan and native Hawaiian entities in the program’s first funding round.

“Broadband can diminish the geographic challenges of time and distance to help rural  areas compete in the global marketplace,” he said. “For example, livestock auctions, which used to require ranchers to travel long distances to bid, are now widely conducted over the internet. Broadband connections to the ranch are often necessary for full market participation. Not only does broadband permit ranchers to follow the market more closely from remote locations, but the Internet can bring in those who otherwise could not participate to create a more robust and competitive marketplace.”

Susan Walthall, acting chief counsel for the Office of Advocacy at the Small Business  Administration, touted the importance of broadband to small firms, but also to small broadband providers.

“While the national plan focuses on the provision of broadband to small business  customers, it is critical that the commission also recognize the unique barriers that exist for small broadband providers,” she said. “Many of these small providers…support Congress’ goals set forth in the Telecommunications Act of 1996 by offering competitive services and pricing. Second, they fulfill the national plan’s focus on expanding service to unserved and underserved areas.  Finally, their presence in local communities has a value in and of itself, providing high tech jobs and strengthening local economies.”

FCC Chairman Julius Genachowski, Sean Greene, associate administrator for investment at the SBA, and Larry Strickling with the Commerce Department also spoke on the panel.

In a second panel, National Association of Broadcasters President and CEO Gordon Smith discussed the importance of implementing portions of the National Broadband Plan on small broadcasters, highlighting that the majority of broadcast stations are small businesses and saying that his group has “serious concerns” with portions of the plan.

He expressed concern with portions of the plan that seek to reduce the amount of spectrum allocated for broadcast television.

Broadcasters have been approached by small start-up entities that want to use portions of the digital capacity on current broadcast channels to provide service to the public, he said.  For example, small company SEZMI has negotiated arrangements with some local broadcasters to lease and aggregate spectrum to deliver high-demand video content to customers.

SEZMI presents itself as a direct competitor to multi- channel services such as cable and satellite.6 Another small business, the CTB Group, seeks a partnership with broadcasters that would provide mobile video and data services along with digital broadcast signals.

“Significantly reducing the amount of spectrum allocated for broadcast television, as the current plan suggests, could stifle opportunities for new entrepreneurs like these to develop innovative services for the public,” Smith said.

Other panelists were American Cable Association President Steve Friedman, Executive Vice Chairman Tom Gerke of CenturyLink, Louisiana Utilities Services Director Terry Huval and CTIA President and CEO Steve Largent.